Incident: The company will not issue an annual report for 2023 and a quarterly report for 2024. In 2023, the company achieved net profit of 1.87 billion yuan, an increase of 49% over the previous year. It is basically in line with previous performance forecasts and in line with market expectations. In 2024, Q1 achieved revenue of 1.45 billion yuan, a year-on-year increase of 12%, net profit to mother of 302 million yuan, a year-on-year decrease of 5%, and net profit after deducting non-return to mother of 377 million yuan, an increase of 22% over the previous year.
Key points of investment
Performance is in line with expectations, and arm amplification drives revenue growth
In 2023, the company achieved total revenue of 6.3 billion yuan, an increase of 16% over the previous year, and net profit to mother of 1.9 billion yuan, an increase of 49% over the previous year. In 2023, the company made great progress in promoting arm products in overseas markets, becoming the main driving force for performance growth:
By product, (1) the scissor type achieved revenue of 3 billion yuan, a year-on-year decrease of 9%. (2) The arm type achieved revenue of 2.4 billion yuan, an increase of 68% over the previous year, and smooth overseas promotion. (3) The mast type achieved revenue of 500 million yuan, an increase of 5% over the previous year, which is relatively steady.
Subregions: (1) achieved domestic revenue of 2.1 billion yuan, an increase of 15% year on year; (2) achieved overseas revenue of 3.8 billion yuan, an increase of 13% year on year. In April 2024, Dingli basically completed the acquisition of CMEC, with a shareholding ratio of 99.5%. CMEC is a local brand in the US. It has been deeply involved in the local market for many years. It already has a certain level of brand awareness and customer stickiness, and a mature sales team. Dingli's acquisition of CMEC is expected to gain more autonomy in the North American market, promote new products faster and expand the market through CMEC's brand and channels. In 2024, Q1 achieved total operating income of 1.45 billion yuan, up 11.5% year on year, and net profit to mother of 30 billion yuan, down 5% year on year, mainly due to the impairment of its Hongxin C&D shares.
Benefiting from product structure optimization, lower raw material prices, and cost reduction in lean production, the gross margin increased significantly by 38.5% of the company's gross sales margin in 2023, up 7.4 pct year on year, and the net sales margin was 29.6%, up 6.5 pct year on year.
The company's gross margin increased significantly, mainly benefiting from lower raw material prices, the release of scale effects, and the company's initiative to strengthen cost control and reduce costs through lean management. In 2023, the gross margins of the company's various products and domestic and foreign gross margins increased significantly: by product, the gross margin of scissor/arm/mast was 40.3%/30.5%/43.5%, up 7.7/9.9/9.5 pct, respectively. By region, domestic/ overseas gross margin was 27.3%/41.7%, respectively, up 5.7% /8.0 pct year on year. The company's expense ratio for the 2023 period was 5.5%, up 0.9 pct year on year. Among them, sales/management/R&D/finance expenses were 3.68%/2.24%/3.49%/-3.88%, respectively, with year-on-year changes of 0.79/-0.03/-0.23/0.40pct, respectively. The cost control capacity remained stable. In 2024, the company's gross sales margin was 41%, up 3.5 pct year on year, continuing the growth trend. Net sales margin was 20.8%, down 3.7 pct year on year.
It plans to invest 1.7 billion yuan to build a new production base, and the new energy high machine production capacity is expected to be further expanded. The company issued an announcement on March 22, 2024. It plans to use self-funded 1.7 billion yuan to invest 1.7 billion yuan to build a new energy aerial work platform project with an annual output of 20,000 units. The project is located in Leidian Town, Deqing County, Zhejiang Province, close to the current production capacity. The construction period is 3 years, and the post-delivery output value is about 2.5 billion yuan. Based on the average price of a single unit of 125,000 yuan, we judge that the project is mainly a scissor lift. As of April 2024, the company's phase 5 factory (a large-scale intelligent high-altitude platform project with an annual output of 4,000 units) has entered the trial production stage, with an output value of 3.8 billion yuan, mainly high-meter arm/scissor products. As the company's arm products are promoted overseas and factory production capacity is released, performance growth is guaranteed for the next 3 years. The new construction project is expected to undertake the fifth phase of the plant, providing further support and guarantee for the company's medium- to long-term growth.
Profit forecast and investment rating: We basically maintain the company's net profit forecast for 2024-2025 of 2.26 billion yuan, and the estimated net profit to mother of 3 billion yuan in 2026, corresponding PE of 15/12/11 times, maintaining a “buy” rating.
Risk warning: geopolitical risk, risk of rising raw material prices, overseas market expansion falling short of expectations